Court of Appeals for the Federal Circuit

The Department of Homeland Security recently publicly released U.S. Customs and Border Protection’s (CBP) annual report to Congress regarding antidumping and countervailing duty enforcement for fiscal year (FY) 2017. The report, titled Antidumping and Countervailing Duty Enforcement Actions and Compliance Initiatives: FY2017, was completed and submitted to Congress on July 30, 2018 and provides a comprehensive overview of CBP’s enforcement activities from October 1, 2016 through September 30, 2017.

CBP’s report demonstrates that antidumping and countervailing duties impact a very small portion of total U.S. imports, with only 0.6 percent of the total value of goods imported during FY2017 subject to these forms of trade relief ($13.3 billion out of $2.39 trillion in imported goods). Moreover, even for the tiny subset of imported goods subject to antidumping and countervailing duties, the total amount of duties deposited at the border ($1.5 billion) during FY2017 was the equivalent of an additional tariff of just 11.3 percent.

Because the United States administers a “retrospective” system for assessing antidumping and countervailing duties, CBP’s report separately discusses two different aspects of enforceing these trade remedy laws. First, CBP’s report provides information regarding the estimated antidumping and countervailing duties that are deposited with the U.S. government at the time of importation. These deposit amounts act as security against ultimate antidumping and countervailing duty liability. Second, CBP’s report provides information regarding the agency’s ultimate “liquidations” of antidumping and countervailing duties. “Liquidations” represent the final duty assessment amounts determined by the U.S. Department of Commerce (Commerce) through the administrative review process. Commerce’s process can result in a determination that the estimated cash deposit rates were too high, resulting in refunds of those deposits to the relevant importers, or the process can result in a determination that the estimated cash deposit rates were correct or should have been higher. In the latter circumstance, Commerce issues instructions to CBP to formally collect the amounts deposited and seek payment for any additional amounts owed.

CBP indicates that shrimp worth $2.7 billion was imported in FY2017 subject to the antidumping duty orders and that $61.5 million in cash deposits were made on these imports. These amounts imply an additional tariff of 2.3 percent on shrimp imports during that year, with shrimp accounting for 23.5 percent of all import value subject to antidumping duty orders and 7.0 percent of all antidumping duty deposits made with CBP in FY2017. These numbers were up from FY2016, when CBP reported that shrimp worth $2.3 billion was imported subject to the antidumping duty orders, with $49.1 million in cash deposits made, implying an additional tariff of 2.1 percent. In FY2016, shrimp accounted for 22.7 percent of all import value subject to antidumping duty orders and 6.2 percent of all antidumping duty deposits made with CBP.

Separately, CBP also reported that the agency liquidated $28.3 million in antidumping duties on past shrimp imports in FY2017, accounting for 5.0 percent of all antidumping duties liquidated that year. This total was down significantly from FY2016, when CBP reported liquidating $123.7 million in antidumping duties on past shrimp imports.

The FY2017 report further explains that the vast majority of the liquidated antidumping duties on shrimp imports in FY2016 and FY2017 have not been collected. Specifically, CBP notes that $101.4 million in antidumping duties assessed on Chinese shrimp imports in FY2016 went uncollected and that $9.2 million out of the $15.3 million in antidumping duties assessed on Vietnamese shrimp in FY2017 have not been collected.

Although CBP’s report does not provide specific details as to the reasons for the inability to collect these antidumping duties, this reporting follows the conclusion of litigation related to Chinese- and Vietnamese-affiliated exporters of an American wholesale seafood distributor, Ocean Duke Corporation. In the proceedings related to the Chinese-affiliate of Ocean Duke, Commerce found that the exporter had provided false and unreliable information to the federal government over several administrative review proceedings and ordered the collection of substantially increased antidumping duties on imports from that company, a decision ultimately upheld by the U.S. Court of Appeals for the Federal Circuit. Similarly, Commerce also ordered the collection of substantially increased antidumping duties in an administrative review of Ocean Duke’s Vietnamese-affiliate after the exporter refused to cooperate with the federal agency’s request for information. This decision was also ultimately upheld by the U.S. Court of Appeals for the Federal Circuit.

Other than the issues reported by the agency in collecting antidumping duties assessed on Chinese shrimp imports in FY2016 and Vietnamese shrimp imports in FY2017, collection rates on shrimp imports have been fairly high. Since 2006, CBP had only previously reported $12.2 million in uncollected antidumping duties, while successfully collecting hundreds of millions of dollars in antidumping duties imposed on shrimp imports.

The total amount of uncollected antidumping duties on Chinese shrimp imports is now reported to be $111.4 million, making it the eighth largest case for uncollected antidumping or countervailing duties after fresh garlic from China ($853.7 million); wooden bedroom furniture from China ($523.3 million); preserved mushrooms from China ($457.2 million); freshwater crawfish tail meat from China ($328.0 million); honey from China ($181.3 million); pure magnesium from China ($166.0 million); and steel wire garment hangers from China ($136.9 million). These eight antidumping duty orders on Chinese goods account for 87.0 percent of the total uncollected antidumping and countervailing duties reported by CBP.

However, CBP explains that the risk of undercollection is present with a wide range of antidumping and countervailing duty orders and used the example of the antidumping duty order on Indian shrimp to support its point:

While certain AD/CVD cases account for a disproportionate share of all uncollected AD/CVD debts, any AD/CVD case (such as magnesium) with a large amount of importations, low cash deposit duty rates, and high final duty rate could result in significant uncollected duties due to the lack of security from the low initial cash deposit duty rate. For example, as shown in Appendix A, in FY 2017, importers lawfully imported over $1.8 billion in imports subject to the antidumping duty order on shrimp from India, and CBP collected over $40 million in estimated cash deposits of antidumping duties. Despite already collecting that money to secure final antidumping duties, for every one percent increase in the final antidumping duties on these imports, this will create an additional antidumping duty liability for importers of over $10.8 million.

Finally, the CBP report also noted that the agency completed 94 audits and audit surveys of U.S. importers of goods subject to antidumping and countervailing duties in FY2017. The commodities imported by these companies included a diversity of products, including shrimp, and resulted in the identification of $27 million in antidumping and countervailing duty “discrepancies,” and the collection, so far, of an additional $1.75 million in duties.

The Department of Homeland Security recently publicly released U.S. Customs and Border Protection’s (CBP) annual report to Congress regarding antidumping and countervailing duty enforcement for fiscal year (FY) 2017. The report, titled Antidumping and Countervailing Duty Enforcement Actions and Compliance Initiatives: FY2017, was completed and submitted to Congress on July 30, 2018 and provides a comprehensive overview of CBP’s enforcement activities […]

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